Sensex sinks 726 points

Mumbai: Banking stocks were plundered in today's trade, as inflation touched a 59-week high, and the government started to shuffle its feet in deploying countermeasures saying t would prioritise controlling inflation over growth.

The markets closed weak on today with the BSE Sensex dropping 4.4 per cent, or 726 points, to close at 15,644 levels. The NSE Nifty was in the red by 4.2 per cent, or 207 points, closing the day at 4,734 levels.

Selling was evident in banking, IT, real estate and metal counters by over 4.3 per cent each.

Other Asian markets had a mixed day as well, with South Korea's Kospi trading in the green, though Hong Kong's Hang Seng and Japan's Nikkei were down by over 1.9 per cent each.

Experts predict that an interest rate cut in near term can be ruled out in total; a few opine that there could be a hike in the cash reserve ratio (CRR) and / or the Repo rate. Bankers predict a significant slowing down of credit demand, which has started to negatively impact banking stocks, resulting in the BSE Bankex down 5.91 per cent.

Banking stocks like Centurion BOP were down 7.5 per cent, followed by HDFC Bank, Axis Bank, and Kotak Bank that was down 6 per cent.

The downslide has been attributed mainly to concerns on inflation, and weak global cues. Midcaps and smallcaps more or less weathered the meltdown in the day's trade, but banking shares and the realty pack had the worst day.

The biggest loser in the BSE-30 was Housing Development Finance, at Rs2383, having shed 8.8 per cent, or Rs230. Other major losers included ICICI Bank, DLF, TCS and ONGC. Amongst the NSE-50 stocks, HCL Tech, Tata Communications, Siemens India and BPCL were in the red by over 6.3 per cent each.